As the FTSE 100 loses yesterday's gains and more, Wolseley is bucking the trend after an unexpected profit warning.

With the building materials group's shares up 128p at £17.36p, of course, the warning was that profits would be higher than forecast. In an interim management statement brought forward from May 24 - perhaps because of a profit warning yesterday from engineer Keller because of US weakness, according to analysts - Wolseley said trading was mixed but its markets continued to stabilise. The UK and Canada produced like for like revenue growth, and the key US market showed an "encouraging" revenue trend. Overall revenues for the third quarter declined by 7% but profits grew to £101m, helped by cost cutting.

For the year, Wolseley said trading profits would exceed analysts' forecasts of £374m.

Kevin Lapwood at Seymour Pierce kept his hold recommendation and £15.50 price target but raised his earnings per share target from 64.2p to 77.2p.

Shore Capital was more positive, with analyst Jon Bell issuing a buy note:

While trading remains mixed, there has been a stabilisation in many of its markets. We note that residential markets have now broadly stabilised though commercial markets are expected to continue to decline. The rate of group like for like revenue decline continues to slow to 2% in the quarter. There has been a continued focus on cost savings and strong product mix, which has led to gross margins being broadly flat on the prior year.

Net debt at the period was £1.1bn – the group has significant headroom in relation to its banking covenants and has committed undrawn facilities of over £2bn. Our view is that the company is now in good shape – underperforming divisions have been disposed of and the balance sheet is well capitalised. Wolseley's operational gearing is very high and we believe the prospect of economic recovery should result in strong earnings momentum going forward.

But to complete the set, Panmure Gordon kept its sell rating:

The Wolseley third quarter update was released earlier than we had expected, possibly due to concerns about US trading after the cautious Keller update. Wolseley has again indicated that trading profits will be ahead of expectations. Our cautious stance on Wolseley is driven largely by concerns about the speed of the US commercial & industrial recovery, plus its high relative valuation. Sentiment surrounding recovery across the US construction sector will, however, be the key driver. While the shares have performed well of late, further positive earnings momentum is likely to be good for its share price.

Overall the FTSE 100 is down 65.09 at 5368. 64, following an overnight drop on Wall Street and in Asia following more US investigations into the banking system. Closer to home, worries about political tensions in the coalition and the plans to tackle the UK deficit also unsettled investors, with the pound again under pressure, down around 0.3% at $1.4542. Owen Ireland at ODL Securities said:

After another tumultuous week, traders may well look to remove risk ahead of the weekend, but such is the degree of volatility, there could be trading opportunities. Varied opinions about the health of the global economy make this a pivotal period for markets.

Miners and banks were again a major drag on the index, with Xstrata down 53p at 1043.5p and Barclays 10.35p lower at 318.65p.